The Fair Debt Collection Practices Act regulates what debt collectors can and cannot do as they attempt to collect from you. Although the federal law protects you in many ways, it does not include provisions for making debts disappear or expire. That means a debt collector could pursue you for the rest of your life for a debt that you legally owe.

Time Frame

State statute of limitation laws prohibits debt collectors from successfully pursuing really old debts in court, and that’s important because the threat of a lawsuit is usually the debt collector’s most powerful weapon. Statute of limitation laws vary by the state, but generally range from three to 10 years according to “The Times.” After that, the debt becomes “time-barred,” meaning the debt collector cannot successfully sue. However, that does not stop the debt collector from attempting to collect from you in other ways, such as by mail.

Considerations

Some people choose to ignore debts that are time-barred by state statute of limitations and also are too old to appear on credit reports. The debt loses much of its significance once the threat of a lawsuit has been stripped away and it cannot be listed as a negative on your credit report.

Warning

“The Times” reports that making a payment on an old debt could reset the statute of limitations from the beginning. According to “The Times,” that’s a common tactic debt collectors use to regain the threat of a lawsuit and to place a negative entry on your credit report.

Source: ehow.com

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Kollect Systems is an innovative tech platform provider with BankTech and FinTech software solutions which leverage AI based decisioning and workflow technologies to help lenders perform Debt Collections & Recovery (BankTech) processes effectively and for mid-size to large scale enterprise companies (FinTech), to automate Receivables, e-Invoicing & Payments better.

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